nstructions

For each of the above items, discuss any additional disclosures in the financial statements and notes that the auditor should recommend to her client. (The cumulative effect of the four items should not be considered.)

CA24.2. (disclosures Required in Various Situations)

Ace Inc. produces electronic components for sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination of Ace's financial statements for the year ended December 31, 2013, Gloria Rodd, CPA, completed field work 2 weeks ago. Ms. Rodd now is evaluating the significance of the following items prior to preparing her auditor's report. Except as noted, none of these items have been disclosed in the financial statements or notes.

Item 2

Recently Ace interrupted its policy of paying cash dividends quarterly to its stockholders. Dividends were paid regularly through 2012, discontinued for all of 2013 to finance purchase of equipment for the company's new plant, and resumed in the first quarter of 2014. In the annual report, dividend policy is to be discussed in the president's letter to stockholders.